- JPMorgan collaborates with multiple Indian banks to launch a pilot examining the potential of blockchain for settling interbank dollar transactions in India.
- The pilot, set to run until year-end, aims to resolve the current delays in foreign exchange transactions using the blockchain-based Onyx JPM Coin solution.
Global investment powerhouse, JPMorgan, has rolled out a pioneering pilot aimed at exploring the prospects of settling interbank dollar transactions in India via blockchain technology. To accomplish this, JPMorgan will be working in partnership with a cohort of Indian banks including Axis Bank, ICICI Bank, Yes Bank, HDFC Bank, and IndusInd Bank.
Operating from the confines of Gujarat International Finance Tec-City (GIFT City), an international financial hub developed to rival those of Dubai and Singapore, the pilot is a bold step towards digital transformation.
“Blockchain technology facilitates instantaneous transactions 24/7, allowing GIFT City banks to align with their respective time zones and operational hours,”
elaborates Kaustubh Kulkarni, an executive at JPMorgan India.
This pilot will persist until the conclusion of the year, with the objective to enhance the current state of interbank transactions, as per Kulkarni. The existing system of foreign exchange transactions in India grapples with multiple delays, including non-settlement over weekends, an inefficiency attributed to the SWIFT payment system.
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JPMorgan’s Onyx JPM Coin solution will be employed to permit continuous settlement of transactions. Nevertheless, the blockchain solution will only be applicable if the participating banks maintain Nostro accounts with JPMorgan and obtain clearance from the International Financial Services Center Authority.
This pilot project has been in the planning stages since March. Hints from industry insiders suggest that these blockchain experiments may extend beyond GIFT City, following the Reserve Bank of India’s (RBI) decision to initiate a U.S. dollar-settled, domestic non-deliverable forward market within GIFT City.
JPMorgan’s venture echoes its commitment to integrating finance with blockchain technology. The multinational bank co-founded Partior, a platform utilizing distributed ledger technology for transnational settlements, an initiative that other banking giants such as DBS Bank, SMBC, and Standard Chartered are exploring.
The Indian government and corporate entities are avid about proliferating blockchain adoption within the country. Despite the RBI’s stringent stance against digital currencies, India aims for a 46% blockchain adoption rate via integration into sectors such as finance, supply chain, security, and real estate. While the RBI and Finance Ministry display caution towards blockchain application in finance, state and municipal governments are leaning towards the technology for efficient record-keeping and administrative processes.
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